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Technical update: 20 August 2018

Violeta Todorova

APA Group (APA) – Approaching resistance 

The rally from the April 2018 low has lost momentum over the past two months and the price has been trading sideways, fluctuating between $9.40 and $10.29. The current short term up swing is approaching key resistance of $10.29 where initial selling pressure may arise.

The RSI indicator is approaching overbought territory suggesting that the current rally is likely to take a breather soon.

Carsales.com (CAR) – Approaching our target

In our last update on August 6, 2018 we discussed the likelihood of the price trading higher and recommended clients buy the stock at $14.15. The price has bounced strongly over the past week and our price target of $15.40 has almost been reached. We note that $15.64 is a key resistance for the stock.

We will be looking to trim positions in the range between $15.40 and $15.60. 

Elders (ELD) – Oversold

ELD has been trading in a correction mode since June 2018 which is still technically intact. The current price action has retraced to its previous support of $6.35 where initial buying interest is likely to arise. A bullish divergence between the price and the RSI indicator has formed on the daily chart suggesting that the price is likely to bounce soon.

The initial upside price target is $7.50. 

GWA Group (GWA) – Approaching resistance

GWA has been trading in an up trend since November 2017 which is still technically intact. The current short term up swing has rebounded to its previous resistance of $3.94 where initial selling pressure is likely to arise. The RSI indicator has approached overbought territory suggesting that the rally is likely to lose momentum soon. Given the proximity to resistance and the overbought momentum readings we are of the view that the near term upside from here is likely to be limited.

We are comfortable to start trimming positions in the range between $3.80 and $3.90.

ResMed Inc (RMD) – Short term weakness

RMD has been trading in a strong primary up trend over the past seven years which is still firmly intact. The weekly RSI and MACD indicators have reached strongly overbought territory suggesting that the price is vulnerable to a pull back. A triple bearish divergence between the price and the RSI indicator has formed on the daily chart showing that the rally is likely to lose steam soon.

While the primary up trend is intact at this point of time, given the overbought and diverging momentum conditions, we are of the view that the price is likely to pull back in the short term and potentially take a breather in the months ahead. 

More information

Morgans clients can login to view all recent technical analysis on companies we cover by browsing the research section and filtering by 'technical analysis' in the Market Updates section. If you are interested in finding out more, please contact your nearest Morgans office.

Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents ("Morgans") do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.